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Big Retailers Revolting


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This caught my eye in the Sunday Times.

http://business.timesonline.co.uk/tol/busi...icle4363980.ece

BRITAIN’s biggest retailers have united against their landlords in an unprecedented rebellion and are calling for a radical change to the way in which they pay their rents.

The retailers are to tell landlords that they will only pay rent monthly in advance rather than quarterly. The revolt challenges one of the key tenets of the property industry and comes at a time when retailers’ sales have been hit by the credit crunch. The upfront payments have a huge impact on retailers’ cash flow.

I've never understood how commercial landlords get away with demanding the rent quarterly in advance. I've always managed to negotiate the concession of paying monthly - landlords have told me that most tenants are always a month or so late paying anyway so a monthly standing order suits them just fine.

That this revolt is coming about now says a lot about the cash-flow of the big retailers...

Edited by Mr Yogi
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Retailer: hi Boys, sorry we have been hit by the crunch, it is hurting us. we are short of money. Can we pay our rent monthly.

Landlord: Sure, if you don't mind me reviewing the costs and increasing it at the same time. You pay this much in advance and then you want to hurt our business too - dreams!

Retailer: No Dreams has already gone bust.....

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Commercial landlords are going to have to face the realities of the current and future situation in a pragmatic way or they are going to have it served up to them on a plate, cold and dead.

Truth is the existing rents are probably way in excess of what is sustainable out of bubble conditions.

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This caught my eye in the Sunday Times.

http://business.timesonline.co.uk/tol/busi...icle4363980.ece

I've never understood how commercial landlords get away with demanding the rent quarterly in advance. I've always managed to negotiate the concession of paying monthly - landlords have told me that most tenants are always a month or so late paying anyway so a monthly standing order suits them just fine.

That this revolt is coming about now says a lot about the cash-flow of the big retailers...

It may be different for the big retailers, but in most standard commercial lease agreements, a landlord can lock a tenant out (peaceful re-entry) for non payment of rent after 21 days. Many tenants do not realise this. Of course in the current climate, a landlord is unlikely to do this, unless they have another tenant in mind to replace them with, so it can be a useful landlord tool to get higher rent or get premises back quickly for redevelopment.

I've known some landlords reluctantly let tenants owe 12 to 18 months rent before kicking them out. Partially because they lose thousands in rent if tenant firms go down. Especially as they now have to pay biz rates on the empty property since April 08.

Landlords can have to wait several years before they find another tenant after doing this.

Edited by Saving For a Space Ship
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I suspect that a combination of the oversupply of retail premises, recession, and competition from the internet is going to cause rents to plummet.

Add to that the new legislation making landlords pay council tax on empty property and it's looking like a perfect storm.

What a pity that the main landlords are your pension funds!

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My lcoal high street is full of empty retail units I guess if landlords dont pay ball there will be many more and the landlord will not find another tennant

Oldham got a new pound shop in the shopping centre where one of the argos used to be.

And there's a discoutn fabric shop where dixons used to be.

New and interesting shops coming.

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Empty shops in Hillsborough Sheffield

Clearly rents are not over priced otherwise you'd have loads of empty shops.

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I think this nearest one here is up for £12500 rent + £11,500 business rates so you need to make £24K a year before you even look at wages etc....

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Edited by interestrateripoff
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CONFLICT DETECTED! DOES NOT COMPUTE!

CARPHONE WAREHOUSE et al vs. COMMERICAL LANDLORDS (ie. PENSION FUNDS, ie. MY PENSION FUND CONCEIVABLY...)

JETTISONING LONG HELD IN VIEWS IN FAVOUR OF SELF INTEREST IN 3...2...

Gulp.

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CONFLICT DETECTED! DOES NOT COMPUTE!

CARPHONE WAREHOUSE et al vs. COMMERICAL LANDLORDS (ie. PENSION FUNDS, ie. MY PENSION FUND CONCEIVABLY...)

JETTISONING LONG HELD IN VIEWS IN FAVOUR OF SELF INTEREST IN 3...2...

Gulp.

Is it fair to say that some of these companies own pension schemes have invested in commercial landlords??

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+ pressure from online retailers. Thing in times yesterday about amazon putting shops out of business.

Personally i hate shopping so the sooner high streets get turned back into housing the better from my point of view. ASDA/tescos caters for pretty much most my requirements.

I wonder if the great British public will still wander aimlessly around where all the shops used to be?. Shopping is THE national pastime, most people I know go into town or a local retail park at the weekend and come back with stuff they don't need or want.

A common thing is,' I don't really need it but at that price I couldn't leave it there, could I?'

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The Sunday Times can reveal that 16 retailers, which between them account for some £2 billion of annual rent and occupy property worth about £40 billion, have signed up for the campaign.

They include Boots, Next, Argos, Arcadia, BHS, New Look, Carpetright, Carphone Warehouse, DSG and Debenhams.

They dont look too solid that line up...

Edited by notanewmember
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:unsure:

I wonder if the great British public will still wander aimlessly around where all the shops used to be?. Shopping is THE national pastime, most people I know go into town or a local retail park at the weekend and come back with stuff they don't need or want.

A common thing is,' I don't really need it but at that price I couldn't leave it there, could I?'

What kind of wacky folk would do that :ph34r: 'tis a point of much mirth and leg pulling in our house that Dad has half a wardrobe/two drawers full of clothes he's never worn, I thought everybody did it :unsure: I've polished the verbals now though; "As the recession bites I won't be buying a thing, look at it this way I've got enough: Ralph Lauren, Armani, Lacoste, Fred Perry, Stone Island, Dolce... to keep me going until the upswing" ;)

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Commercial landlords are going to have to face the realities of the current and future situation in a pragmatic way or they are going to have it served up to them on a plate, cold and dead.

Truth is the existing rents are probably way in excess of what is sustainable out of bubble conditions.

I am all for landlords reducing their rents...then the savings can go towards reducing good in the stores and paying employees more...we can keep our stores and all win, apart from the landlords...having said that, they will win as they will still have a tenant.

Better a tenant than no tenant at all. ;)

Edited by winkie
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I am all for landlords reducing their rents...then the savings can go towards reducing good in the stores and paying employees more...we can keep our stores and all win, apart from the landlords...having said that, they will win as they will still have a tenant.

Better a tenant than no tenant at all. ;)

have you not heard that expression "better an empty house than a bad tenant". When prices are rising it doesn't matter if the tenant is good, bad or indifferent, in a falling market bad ones can ruin you..

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have you not heard that expression "better an empty house than a bad tenant". When prices are rising it doesn't matter if the tenant is good, bad or indifferent, in a falling market bad ones can ruin you..

Explain how a bad tenant can ruin you, the worst they can do is default on the rent...the land is still yours, and vacant commercial property now means you have to pay unoccupied taxes.

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have you not heard that expression "better an empty house than a bad tenant". When prices are rising it doesn't matter if the tenant is good, bad or indifferent, in a falling market bad ones can ruin you..

I think we may see more than a few 'empty houses' in retail shortly. One thing I have noticed recently is how overstocked a lot of womens' clothing stores are. Loads of summer wear at up to 70% off. The poor summer we've been having can't have helped.

It will be interesting to see which stores go west first. There is a lot of retail that have enjoyed a boom in the debt explosion days, but I think will fail to thrive in a more restrained enviroment.

Edited by eightiesgirly
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Explain how a bad tenant can ruin you, the worst they can do is default on the rent...the land is still yours, and vacant commercial property now means you have to pay unoccupied taxes.

But after 6 months you can put in for permission to change use to residential.

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